Institutional investors were souring on cryptocurrencies even before this week. The sudden downfall of Sam Bankman-Fried’s FTX.com may have permanently damaged their prospects of being included in mainstream portfolios. While plenty of industry die-hards remain, many professional money managers are saying the case for crypto as a portfolio diversifier or digital gold has been debunked. The losses are too great and the market structure is too risky, they say. “What’s become clear is it will not find a home in institutional asset allocation,” said Hani Redha, a multi-asset portfolio manager at Pinebridge Investments in London. “There was a period when...